At MortgageDepot, we are always looking for ways to save people money. Avoiding the monthly cost of mortgage insurance premiums is one way to save money, but high loan to value ratios when refinancing your current mortgage would normally make mortgage insurance a necessity. We can now offer to refinance your first mortgage and include a cash-out home equity line of credit. Refinancing an existing first mortgage and simultaneously applying for a HELOC allows you to avoid mortgage insurance and also avoiding Jumbo interest rate pricing. By breaking up your Jumbo loan into 2 loans, one a conventional loan with conventional interest rate and a Home Equity line of Credit as a second simultaneous loan. An example would be:
Avoiding Jumbo loan interest rate – If you are applying for a loan amount of $700,000 on a single family residence that is considered a Jumbo loan which normally carries a higher interest rate than conventional rates. But if you split your $700k loan into $636,000 and $64,000 this was way your interest rate for $636,000 will be less by at least .25-.5%. The Heloc allows for interest only payment and you can pay-off that loan at your own pace.
Other Benefits of a cash-out HELOC
Imagine having a readily available source of funds for home improvement projects, to take advantage of investment opportunities as they occur and as an emergency fund to back up your savings. The funds from a cash-out HELOC can be used for debt consolidation and paying off those high-interest credit cards. The money is yours to put to any use you deem appropriate.
How HELOCs work when refinancing your first mortgage
The cash-out HELOC in conjunction with a refinance of the current mortgage debt has a few rules associated with it. Included among them are the following:
- Minimum HELOC is $25,000
- Maximum HELOC is $250,000 for a second home and $500,000 with a combined loan to value ratio below 85 percent
- Available for primary residences with 1-2 units and maximum CLTV of 89.99 percent
- Single-unit second homes eligible with CLTV as high as 85 percent
The cash-out HELOC program is available for purchase transactions in addition to rate and term refinance or cash-out refinance. The program does not require seasoning, so newly acquired properties are eligible.
30-year HELOC available from MortgageDepot
The cash-out HELOC has an initial draw period during the first 10 years with monthly payments being interest only from years one through 10. From year 11 through year 30, principal and interest are amortized.
As the premier mortgage brokers in Queens, New York, MortgageDepot has loan programs to fit your needs. Speak to one of the professional mortgage brokers at MortgageDepot for more information about all of our mortgage programs.